Turkey rating outlook raised to stable by Standard and Poor's

Standard and Poor's Friday raised its outlook on the Republic of Turkey to stable from negative and affirmed the country's credit ratings. Turkey's main credit rating was kept at single-B-minus, the r

Standard and Poor's Friday raised its outlook on the Republic of Turkey to stable from negative and affirmed the country's credit ratings. Turkey's main credit rating was kept at single-B-minus, the rating that was given when the agency lowered its outlook in April for the country.

The outlook revision "reflects Standard and Poor's view that the risk of events leading to a downgrade is now balanced by improved prospects for the continued implementation in 2002 of appropriate financial policies and structural reforms, in the context of a new three-year IMF standby arrangement," the agency said.

An IMF team is due to start discussions with the government soon on the new arrangement and ways to close an identified financing gap in 2002 of about $10 billion, it noted. S and P said that despite a widespread belief in the markets that the IMF has pledged to close this financing gap from its own resources, this is not a foregone conclusion, and the negotiations will determine the composition of financing from various sources.

The IMF is expected to approve the new arrangement in January at the earliest, but "much could go wrong" during the discussions in the meantime, it said. Nevertheless, the credit rating firm said that the prospects for a positive outcome have now improved, following the completion by the IMF of the much-delayed 10th review of the program on November 28. — (AFP, New York)